Japan’s land prices up at fastest pace since 2008 on gradual economic recovery

JAPAN’S land prices rose for a second straight year at the fastest pace since 2008, spurred by signs of economic recovery after the coronavirus crisis, a government survey showed on Wednesday (Mar 22).

Average land prices grew 1.6 per cent in 2022, outstripping the previous year’s gain of 0.6 per cent, with the trend spreading to the countryside, the survey by the land ministry found.

It was the fastest pace of increase since 2008, when a growth of 1.7 per cent was recorded.

Demand for housing in urban areas was solid, partly because of low interest rates, while a shift to working from home helped land prices in the suburbs. Demand for offices and condominium sites boosted a recovery in commercial prices.

“The recovery trend in land prices towards the pre-Covid level has become more remarkable, as prices in urban areas continued to grow and expanded to rural areas as well,” said the ministry, which surveyed about 26,000 locations.

Residential land prices rose 1.4 per cent for the year, the fastest pace since 1991 and overtaking a 2021 rise of 0.5 per cent, helped by low interest rates and a government tax break for housing. The survey’s results will provide a basis for land transactions.

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Japan’s commercial land prices gained 1.8 per cent, versus growth of 0.4 per cent the previous year, led by solid demand for shops and offices, the survey found. The return of domestic travellers to tourist destinations helped the recovery.

Expectations for a return of foreign visitors also supported commercial land prices in some popular tourist spots, such as Osaka and the ancient capital of Kyoto, after the easing of Covid-19 border curbs.

Commercial land prices rose for the second successive year in metropolitan areas around the capital, Tokyo, and Nagoya, while those in Osaka grew for the first time in three years.

Average land prices in the four major regional cities of Sapporo, Sendai, Hiroshima and Fukuoka advanced 8.5 per cent, up for the 10th straight year, led partly by redevelopment projects. Residential land prices in other regional areas rose for the first time in 28 years.

Land prices in industrial areas rose 3.1 per cent, up for a seventh straight year and at the fastest pace of growth since 1991, as a burgeoning e-commerce industry drove demand for sites suitable for large logistics facilities with good access, the survey found. REUTERS